For some people, watching movies in theaters is routine every time a new movie is released. Watching a movie at the cinema is a form of refreshment after doing various activities that drain energy and mind. Some people think that watching movies using a wide screen with good audio and other facilities provided can provide a different experience than watching movies through other media.
The enthusiasm of the Indonesian people to watch new films released in theaters is very high lately. Almost all cinemas in Indonesia are always crowded, both on weekdays and weekends. This is because the new film that was released was highly anticipated by the public. There are two films with close release schedules, namely KKN Desa Penari (released on April 30, 2022) and Doctor Strange in the Multiverse of Madness (released on May 5, 2022).
However, did you know that watching movies in theaters is not subject to Value Added Tax (VAT)?
The Indonesian government provides an exemption from the imposition of VAT on movie viewing in theaters through the Minister of Finance Regulation (PMK) of the Constitutional Court Number 158/PMK.010/2015 concerning Criteria for Arts and Entertainment Services that are Not Subject to VAT . The aim is to provide legal certainty to local governments in collecting local taxes and provide confirmation on the basis of imposition of taxes so that there is no double taxation.
Double taxation or double taxation is taxation on the same object and tax base, and in the same period by two different jurisdictions. For example, if watching movies in theaters becomes the object of VAT (a tax managed by the central government) and the object of the Entertainment Tax (a tax managed by the local government). The tax costs incurred will be charged to consumers, making cinema ticket prices expensive. Expensive cinema tickets can reduce people’s interest in watching movies in theaters at affordable prices.
In addition to providing legal certainty and avoiding double taxation, the exemption from VAT on film viewing in cinemas also aims to support the development of the cinema business in Indonesia. This VAT exemption can reduce cinema ticket prices. Affordable cinema ticket prices can foster public interest in watching movies in theaters. The following is a description of the laws and regulations that provide confirmation of the exemption from the imposition of VAT on film viewing in theaters.
According to Article 4A paragraph (3) letter h of Law (UU) Number 8 of 1983 concerning VAT and PPnBM as amended several times, most recently by Law Number 7 of 2021, services arts and entertainment are services that are not subject to VAT. Criteria and details regarding arts and entertainment services that are not subject to VAT are further regulated by PMK Number 70/PMK.03/2022 concerning Criteria and/or Details of Food and Beverages, Arts and Entertainment Services, Hospitality Services, Parking Provision Services, and Services Catering or Catering Not Subject to VAT.
Article 3 PMK Number 70/PMK.03/2022 explains that arts and entertainment services which are objects of Regional Taxes and Regional Levies (PDRD), include types of services that are not subject to VAT. The types of arts and entertainment services that are not subject to VAT are regulated in Article 5 paragraph (1), which include film viewing or other forms of audio-visual spectacle shown live in a certain location, art performances, music performances, dance performances, beauty contests, discotheques. , nightclubs, and more.
The words “film viewing” and “shown directly at a certain location” in Article 5 paragraph (1) provide confirmation that watching movies in theaters is not subject to VAT. However, if you watch movies on a paid subscription basis on a movie streaming application, VAT is charged according to the applicable rates. This is regulated in Article 5 paragraph (2) letter b that what does not include arts and entertainment services is the delivery of digital services in the form of streaming films through internet channels or electronic networks.
From the description above, it can be concluded that watching movies in theaters is not subject to VAT. However, the activity of watching movies in cinemas is the object of the Entertainment Tax which is managed by the local government. Each region has different Entertainment Tax rates according to their respective regional regulations. The exemption from the imposition of VAT on watching films in cinemas is in accordance with its objectives, namely providing legal certainty to local governments and avoiding double taxation. Another goal is to support the development of the cinema industry in Indonesia.
Sumber https://www.pajak.go.id/id/artikel/nonton-film-di-bioskop-tidak-kena-ppn